What Happened?
Shares of mortgage REIT Two Harbors Investment (NYSE:TWO) fell 5.9% in the afternoon session after the company announced a $375 million cash settlement to resolve pending litigation, contributing to the stock hitting a 52-week low. The agreement with PRCM Advisers and Pine River Capital Management resolves all outstanding legal claims between the parties. However, the substantial one-time payment has concerned investors. The company estimates its book value per share will be approximately $11.06 after accounting for the $375 million cash payment. Adding to the negative sentiment, Two Harbors recently reported second-quarter earnings that missed analyst expectations, with an earnings per share of $0.28, below the forecasted $0.34. Revenue also fell short of projections, contributing to the stock's decline.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Two Harbors Investment? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Two Harbors Investment’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Two Harbors Investment is down 20.5% since the beginning of the year, and at $9.54 per share, it is trading 32.8% below its 52-week high of $14.18 from February 2025. Investors who bought $1,000 worth of Two Harbors Investment’s shares 5 years ago would now be looking at an investment worth $434.99.
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